West Brom lending soars, but court case punches hole in profits
The Black Country's biggest building society, the West Brom, has seen a huge jump in mortgage lending, up almost 50 per cent to £441 million.
But its latest figures, for the six months to the end of September, reveal the impact of the lost court battle with a band of property landlords this summer.
The society was left with a £27.5 million bill after the Court of Appeal ruled it was wrong to have more than doubled the tracker mortgage interest rate it was charging 6,700 buy-to-let landlords three years ago.
That punched a big hole in its figures, dragging the West Brom to a top-line half year pre-tax loss of £23.7m.
Chief executive Jonathan Westhoff said: "Despite the disappointment of the buy to let judgement, I am pleased with the underlying progress that the society has made in the first six months of this financial year.
"We expect to see further growth in our residential lending and ongoing investment in our mortgage and savings systems to support sustainable growth and continue to improve the customer experience for our members."
Stripping out that one-off payment to the landlords, its underlying profit more than doubled, up to £3.8m from £1.3m at the same time a year ago.
In its statement this morning, the society said: "The underlying business, however, continues to go from strength to strength with increased advances of £441m almost 50% higher than the previous half year."
It has cut the level of arrears across its residential mortgages and cut its commercial lending by another £46 million. It has been slowly reducing its commercial lending since the funding crisis of 2009, when it crashed to a £48.8m loss in the wake of the credit crunch and nearly went out of business.
Today it is now the seventh largest building society in the UK with 446,000 members.
The latest results, said the West Brom: "Demonstrate a sound performance of the underlying business."
"Our capital position is robust and liquidity remains strong, with customer deposit balances being maintained."
The society has also moved into its new 70,000 sq ft five storey home at Providence Place in West Bromwich, which will be the base of around 500 of its staff.
But there are concerns following the vote to leave the EU this summer. "Following the Brexit decision the economic environment has become more uncertain, particularly in the commercial real estate sector where the society still has an exposure albeit significantly less so than in previous years.
"This presents the most prominent area of uncertainty for the second half of the financial year. Despite this, we are confident that the society will deliver on its lending plans."
